taylor: welcome to "bloomberg businessweek." i am taylor riggs. jason: i am jason kelly. we are at bloomberg headquarters in new york. taylor: one of our favorite stories, justin trudeau. we spoke about how he is navigating negotiations with president donald trump. jason: trade on the forefront, we also go global with one of the most listened to voices on mohamed and economics

el-erian, and he tells us what to be worried about and what not to be worried about around the world. taylor: with our cover story, some say toys "r" us and others say tears "r" us. jason: a deep dive into the world's most famous toy store. taylor: and some saying why they didn't have to declare bankruptcy. carol massar spoke to a reporter. carol: toys "r" us was really one of the first of the big box stores. it started in the late 1950's but came into its own in the 1970's and 1980's. started by charles lazarus, who had a simple idea. a lot of people were coming home from world war ii, he served. they were starting families and were going to have kids and they wanted homes and wanted to fill those homes with lots of things, including toys. so let's sell toys to kids. because he was among the first and he was able to spread nationwide, he was the first

category killer, meaning a lot of the small neighborhood toy stores went out of business because of toys "r" us. carol: 1994, mr. lazarus steps down. why? susan: the company was that a peak. i don't know if he recognized that at the time, but he had worked really hard. he was still involved for a couple of years but like a lot of people, he decided it might be time to take it easy, let the next successors try. whether or not he knew in the back of his head that walmart was encroaching -- obviously, he knew the market share, but did he see what was about to come? carol: talk about that. a few years later what happens with walmart? susan: four years later, they have already gone through his two deputies who take their turns as ceo and by 1998, walmart has overtaken toys "r"

us as the biggest toy seller in the u.s. stock price goes down, all of a sudden, they look like they are no longer invincible. carol: the other thing is online. what happened with toys "r" us and online? susan: they made a big mistake. they weren't the only company, but they underestimated amazon. at the same time, they trusted amazon and made a deal where they would basically transfer their early website on to amazon and sell through amazon. carol: basically gave away control. susan: yeah, right, and the opportunity to learn about customers, data, about the supply chain and being able to deliver, what people buy, so that eventually led to a lawsuit and toys "r" us did get its website back, but they had lost some really crucial years. carol: talk about what happened in 2004 and 2005.

in 2004, the company looks to sell itself. susan: a decide to look for investors and eventually, sell the company to two private equity firms and a real estate trust. that is kkr and vornado. carol: i assume it involved a lot of debt? susan: it was the leveraged buyout era. they didn't do anything so radically different from other big deals at the time. no one could -- i shouldn't say no one -- but they couldn't foresee what was to come in the next years and what would make that deal so problematic in hindsight. carroll: meaning what? susan: there -- carol: meaning what? susan: there was a lot of debt, and toys "r" us obviously had to pay off at least the interest on that every year.

in the good years, it was maybe a manageable amount, but there were not many good years. carol: where are we today? we know they have filed for bankruptcy. this company is done. susan: it is, in the u.s., it is done. they have an overseas division, some of those were sold to asian business. toys "r" us will exist outside the u.s., but in the country that made it what it is, they are liquidating everything down to the chairs in their headquarters in new jersey. taylor: we're here with the creative director of the magazine. walk us through the making of the cover. it was toys "r" us this week. >> it was a great story with a lot of visuals to work with. toys, and we chose something people would recognize quickly. their mascot, geoffrey the giraffe and had him bawling on the cover. jason: how challenging is it when you have these iconic images? it feels like an opportunity, but also a challenge. >> we just came out with a bunch

of things, and we had the idea of toys getting fired from work, so that ended up on the inside of the magazine, which turned out great, but we felt geoffrey was the cover image, the cleanest, grabbed the viewer and worked well. taylor: the other thing that caught my eyes are the tears. it has been a sad part of the story for the company. how did you come up with that idea? >> we wanted to put him in a situation that is distressed. first we thought he was depressed on his couch, but the tears felt like the cleanest way to do it. justin sad about that. jason: it is very evocative. turning to the international piece byly have a mohamed el-erian, a noted and trusted investor, how to fix a fragile system. you chose to use words, but not straight ahead. how did you do this? chris: because it is dealing with more abstract concepts, we chose a type direction and

messed up the type. you can see the look of it. just kind of getting at this volatility in the world and using that in a typographic way. jason: next, evidence much of the world has yet to recover from the great recession. taylor: plus, the most important voting bloc in italy. jason: this is "bloomberg businessweek." ♪

taylor: welcome back. i am taylor riggs. jason: i am jason kelly. you can find us online at businessweek.com. taylor: and on our mobile app. opening up the remarks section, we got to speak with mohamed el-erian, one of the most influential voices in global economics. jason: we asked what advice he would give policymakers around the world. here is what he had to say. mohamed: we have had years of distorted markets. we have had massive liquidity come into the marketplace, it

has felt really good. look at last year, over 20% returns in global markets, equity markets, we even made money on government bonds and all of that was very low volatility. that is not supposed to happen, but it did because we have exceptional circumstances. now, we are slowly exiting exceptional circumstances and it will take some time for markets to realign themselves to more normal patterns. jason: one of the phrases you used new the top of this piece, and i will quote you, "an awareness has spread that "too many years of insufficiently inclusive growth does more than undermine economic performance and potential. it tears at the fabric of society." that is a pretty sweeping statement. what are the implications of that? mohamed: the simple point i was trying to make was when a economy grows too slowly and the benefits of those growth are seen and do go to a small

segment of the population that is already better off, people get angry, and when people get angry, it puts pressure on the institutions, on the establishment, on the social fabric, on the political system, and on the economy. that is what has happened. when you look at brexit, the antiestablishment candidates, president trump here, president macron -- if you look at what is happening in italy, that is only a reflection of people saying enough is enough, the system hasn't delivered for us and therefore, we are going to change the system. taylor: what would be a good solution for that? mohamed: to grow rapidly, more inclusively so that more people feel they are better off, and correct what glaring problems in the economy and in the politics. that is the best solution. getting there is not a question of engineering. it is a question of political

will. i think the big question for everybody is, is the disruption we are seeing in domestic political systems shakeup the establishment so much that we get the willingness to implement policies that deliver better outcomes? that is a big question mark out there. it is true for the u.s., europe, and emerging economies. jason: are you seeing early signs across the world that may be happening now that we are a year plus into the trump administration? mohamed: the awareness has gone up that you cannot continue in the new normal as we called it, period of low and insufficiently inclusive growth. things start to break and there is now great awareness of this among both the antiestablishment movement and the establishment movement. second, we have seen progress in the u.s. you have seen efforts to promote growth. growth has gone to be the number one issue. you see it happening in europe.

there is a lot of hope in france under president macron. you are seeing some early signs of a course correction, but it is important that be sustained. taylor: what you point out is there has been some progress, but it might not be enough. the u.s. has done a good job, macron, but the rest of europe and some emerging markets -- brazil, other countries, still have a ways to go. mohamed: only the u.s. was policy driven. in europe, the result of the natural healing process. economies heal. it is like coming out of the hospital. you are no longer in intensive care, but if you are structurally impaired as europe is, you can walk, but you can't run. the pickup doesn't get sustained. in the emerging worlds, countries were bouncing back from a particular shock. brazil, political shock. india, demonetization.

russia, commodity prices. we failed to see that this wasn't really a virtual self-feeding cycle, this was the result of some temporary factors and only a few more permanent ones and therefore, the global economy would run out of steam and that is what we are starting to realize today. taylor: in your piece, you mentioned how they did not address volatility. almost on purpose, they took a hands-off approach when the volatility earlier this year really spiked up. was that the right approach? the ecb and the fed giving a hands-off yield on volatility? mohamed: i think it was because they had conditioned markets too much to buy on dips every time. they had conditioned markets to believe that we live permanently in the low volatility world, and that causes also misallocation of resources. it causes excess of risk taking. it is not a good idea to permanently repress volatility. jason: in the economic section,

we go to italy. taylor: our editor tells us what is really troubling rome. >> behind this surprising victory in march for the two really extreme parties is this sense of malaise. the two parties being the five-star movement, which is populist, kind of lefty, represents the poor south of more, and the north is right-wing, anti-immigrant, representing more of the wealthy north of italy and the two parties came together and formed a coalition government, which will be a little tricky because they differ on a lot of issues. what i write about is one of the issues they agree on is helping the older worker. jason: this is the equivalent of the bernie sanders wing of the democratic party and the donald trump wing of the republican party having to figure out how to govern together. >> there are a handful of issues in which they seek tie-dye, and

-- they see eye to eye, and one of them is the for now law, in 2011, the agreed they would try to raise the retirement age in italy because as a society ages, there is a higher share of the population that is out of the job market. being supported by a small tear ier of working people and that partly goes back to the low birth rate. you can deal with that problem if you raise the retirement age and this 2011 reform was wildly heralded as an extent forward for the rest of europe and the world. now, they want to roll that back. taylor: and let the italians retire younger. how can they do that? if you look at what is going on in their economy, i think about what that will do potentially to pensions and sovereign debt? peter: it raises the cost to the government, and this being done

and at the same time the other right-wing party is pushing for a flat tax structured to pull in less revenue and the five-star movement is pushing for some guaranteed income to raise spending, so you have pensions, guaranteed income, tax cuts all coming together. carol: how do you pay for that? peter: you don't. you have large budget deficits. carol: the support, these parties agreed on the idea of lower age of retirement. what is interesting is the support of that party has come from younger folks. peter: the five-star movement is well-known to be a youth movement. it is almost like a nonparty party. the lega is more balanced in terms of age, but its weakest support is among the older people and of the population. here, you have parties where you

have the older workers, where, hey, you voted for us, but yet, they are taking advantageous action to the elderly and disadvantageous to the young. jason: next, trudeau on trade and trump. taylor: plus, the impact of those trade policies on global economics. jason: this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." i am jason kelly. taylor: i am taylor riggs. you can listen to us on radio on sirius xm channel 119, and on am 1130 in new york, 106.1 in boston, 99.1 fm in washington, d.c. and am 960 in the bay area. jason: in london on dab mux 3 and in asia on the bloomberg radio plus app. we are here with editor in chief joel weber. inside the magazine, a debrief with justin trudeau. very timely. how did this happen?

joel: it is our flagship interview series with the biggest names we can speak with and justin trudeau is one of them. generated attentive news out of this. the same day we spoke with him, canada nationalized the pipeline. there is a lot of internal politics that will come of this but he framed it as a trade issue and a trade has become such a sticking point with canada in general since the u.s. and canada are trading partners above any other two countries in the world. jason: to say it is a sticking point is an understatement in the way that justin trudeau has really sharpened his language back to the u.s. after spending a lot of time cozying up to donald trump. joel: this g7 is an amazing framework where we have talked to them and trade continues to blow up. now it seems like more of a g

6 versus a g1 almost, that g1 being the u.s. taylor: trade is timely, but what else did he say about jobs and other things outside the trade story? joel: the big thing he has done is turned canada into a country that the u.s. looked like not too long ago. a huge welcoming place and they are kickstarting innovation through ai, trying to diversify workforce. one of the biggest things he will talk about is how proud he is of his cabinet, which is more than half women. the first time that has happened anywhere in the world. it is an outward facing, international message at a moment in time when the u.s. has become much more protectionist, which is something we talk about in the issue. jason: you mentioned the flagship interview. who are the types of people you have heard from? joel: melinda gates, we are really after people who are game changers.

like bigger than life and have the capacity to really affect change and justin trudeau is obviously someone like that. taylor: we focus a lot on global trade this week. it was a big topic with the g-7 meetings going on. jason: in the politics session, deep dive into how the trade policies from the trump administration are having a destabilizing effect around the world. taylor: we spoke with editor matthew philips. matthew: things keep ratcheting it up, especially as we were just getting out of the g-7 meetings where secretary of treasury steve mnuchin, who counts himself alone these days in the trump administration as the free trader, was ganged up by a lot of u.s. allies saying what is going on in washington? why are you doing this? we failed to provide exemptions to the eu, mexico, and canada fs onerrorists -- tarif steel and aluminum and they have

responded with retaliatory tariffs on a lot of u.s. goods. taylor: can you walk us through the difference between raising tensions with european union and canada versus the heightened tensions we have with china, as well? matthew: he wanted to get tough on trade. it was key to his agenda on the campaign. the premise was wrapped around pushing against china. and how they are an unfair trade partner and they skirt a lot of established global trade rules established by the wto. what we are seeing now is this across-the-board shot at our allies and people are raising these questions about, how does that affect the situation with china and does that actually undercut our attempts to knock china's momentum down a little bit and does that actually advantage them by allowing them to drive a wedge between the u.s. and its allies? jason: how surprised were you,

if at all, by the strength of the rhetoric we heard from some u.s. allies? matthew: not very. the idea trump would come in -- one of the premises of the piece was written by a great reporter in beijing, was that trump would come in and use the bully pulpit and use trade as his big stick. and use the leverage of the $3 trillion or so of foreign goods that the u.s. buys every year as a way to renegotiate these deals with friend and foe alike. i think he expected to get traction on that. i think he expected countries to willingly renegotiate, but that is not what has happened. he has gotten minor concessions, but most of the world has stood its ground and said no, we are not going to do this bilaterally and we are going to respond with reciprocal tariffs ourselves. taylor: is there any fallout

that could have an impact on the primaries and the elections coming up? matthew: the degree to which he has changed the republican party's platform as it relates to trade is pretty astonishing in the span of one election cycle. he has taken what has been for decades the party of free trade and moved it into a situation that has been historically held by the democrats, which is protectionist platform. there is a pew research poll that was done that said majority of republicans do not favor free trade agreements, especially compared to democrats who favor free trade agreements more than republicans. there is obviously political components to this but it is not a geopolitical writ large component. it is more focused to u.s. voters in places like pennsylvania, places like ohio, georgia, that have lost a lot of

manufacturing jobs and you hear people who are in these industries -- this, to them, is a big change in what they feel has been a conversation in washington for decades that has forgotten them. taylor: next, why get hub is worth $7.5 billion to microsoft. jason: and we take you to where credit card fraud is alive and thriving. taylor: this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." i am jason kelly. taylor: and i am taylor riggs. still ahead, a look at why online merchants are still struggling with fraud. jason: in a different crime, crimes that built one of the most ambitious museums, and an outdoor museum in brazil. taylor: i want to go over to the technology sector. a big deal happening in the mma space. jason: $7.5 billion for this

company that is a playground for developers. taylor: a playground for the ceo. he changed his stamp on how he feels about the open source software. jason: carol massar and i caught up with our tech guru for more. github commoditized something that is a really important thing to developers, developers get very excited about it. i'm sort of like oh my gosh, i can have an unlimited storage. i store a lot of my personal data there because it is a good tool. it probably had a chance at one point to make it into the way that we do files in the future, but it kept us focused on developers. that is a microsoft came in and bought it. carol: how come we knew about the knicks -- linux but not about github?

is this a different world? >> this is pretty low level stuff. it could also argue that it is a big idea that no one has figured out to commoditized yet. carol: unlimited undo. +z forever. >> exactly. also, everyone can share that control. you can have your own version and everybody can work together and meet up in the middle, but you never lose anything. magical to developers and never found the consumer use. you could argue maybe this is why github is getting bought by microsoft instead of being the next microsoft. jason: if you're sitting down in silicon valley at google or facebook or apple, what is your reaction? >> the main developer on the underlying software works at google. i think a lot of them are just like ok. you saw it happening, those numbers are no longer crazy. i think it is just like it had to go somewhere, it had trouble getting a ceo. there was a lot of drama about the company four years ago. also, it venture capital backed.

is there has to be in a position. jason: at some point there was going to be some kind of exit? >> exactly. they were talking to stakeholders, and i think everybody said ok. , it isthe key executives a stock deal, so they are now becoming the biggest shareholders in microsoft. what say might they have in microsoft going forward? >> i don't know. microsoft corporate structure, i don't know. now, it sounds like they may want everyone to talk about it at the table. when you talk to people coming out of there, it doesn't feel like they are all pointing guns at each other like it used to be. who knows? cloward and open-source is huge for them and github is key to it. they pulled off something to the tune of $7.5 billion. if they continue to lead, and the new ceo of github comes from an open source company, and they

will put him in charge, so it is definitely a new -- that part of the world is definitely running along the different principles than it was 10 years ago. it is going to take a while to figure out what is really happening. jason: you had a line where you said if apple makes yachts, microsoft makes a battleships. >> microsoft makes great tools for developers. there is visual studio code, which is open source. microsoft is just such a beast. apple comes along and says hey i have this one thing and it is really slick. we are going to give you just write number of options and you're going to be pretty happy. there's a real difference between those two companies. it is hard to imagine apple wanting github. it does not want all the drama and developers. it wants things along apple's codes. they are going to tell you how to program. they're happy that you use it, but they have a way they want things to be done. microsoft is like come on, let's all get in here. this is truly their dna. they have always loved developers. was, it wasthat era

sincere. developers made microsoft into a huge, great company. i think that part of their foundation really matters to them. jason: this could be a galvanizing moment for microsoft? >> they are putting some money where their mouth is. they're saying we are going to commit to this. if they blow it up, there went -- they are going to blow up all of the goodwill their developers deeply care about. there is a lot on the line here. it would be pretty bad if they screw things up. taylor: a really alarming story. jason: retailers really cracked down on fraud in their stores, but now online they are losing tens of billions each year. taylor: it doesn't seem like the problem is going away anytime soon. jason: we heard more from our reporter. >> the head of e-commerce investigation at petsmart, he and his team spend their days in petsmart's headquarters in phoenix and they comb through hundreds of transactions that come in through petsmart's website every day looking for

suspicious activity and trying to ferret out the fraudsters who have stolen credit cards to buy items from petsmart. us about the tell online fraud we are seeing. >> chadha started to look at these transactions. petsmart has a very prosecutorial take on this issue. they want to actually build cases, turn them over to police and actually prosecute these fraudsters. one day last summer they noticed an unusual thing happening where a bunch of fraudsters were ordering dog collars. carol: $400 electronic dog collars. >> yes, the shock collars. last summer, he started to notice all of these fraudulent transactions happening and shipping to homes across the country. he is based in phoenix. one of the homes getting the shipments was tucson, arizona, so he decided to work with local

police and set up a control delivery. when he arrived, what he discovered -- carol: day-to-day stakeout, essentially. where is the dog collar? jason: he is sitting in this hot police car all day, he said he spent the whole day with these police officers waiting for the guy to get home and pick up the delivery. >> when he goes in to interrogate the guy, he asks what are you doing? the guy said that his job was basically he had found this job on craigslist where he basically received packages and forwarded them on. they paid him $20 a package and that was the extent of his involvement. chad convinces this guy to give him a list of everything that they were shipping for the service. it was things like dog collars, tents, containment fences, clothes, shoes, backpacks. don'taside, fraudsters

only buy things with low resale value. the way they make their profit is buying a $1000 television and selling it for dog collars and $900. tents, those are things you do not resell. police basically started to suspect that this is human trafficking. what they found out was this guy was shipping them to freighters that worked with companies in the eastern block. it has now been turned over to the fbi, who are working with interpol. it is an insane example where retailers going after these fraudsters can stumble into something darker. guy may be specific a couple steps ahead of the law in some cases, and not always getting exactly what they need from an enforcement perspective. >> yes. chad said that when he first started at this job, he was laughed at. he would call police and say we have these fraudsters, we need your help.

he didn't have the data or any information you need to turn his cases over. now, he works with a bunch of different technology companies that give him the data he needs. he built binders and hands them over to police, doing their job for them. pointing them to where they need to go to prosecute these guys. jason: next, the ceo of health care giant cigna sits down with us to talk about the future of health care. taylor: this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." i've jason kelly. taylor: i am taylor riggs. you can find us online at businessweek.com. jason: and on their mobile app. back here with her editor in chief of businessweek, a big week this week on bloomberg. we had the investor conference.

you helped kicked off with a big interview in a health care space. joel: the ceo of cigna, we spoke on monday night. we tried to talk about strategy at cigna. this is a space that a lot of people are talking about. there is so much disruption. the government is talking about it, costs are high. one of the things we spend a lot of time talking about was the express scripts merger and why that is happening for cigna. what they think the opportunity there looks like. taylor: what did they say about the changing landscape of health care? such a controversial topic here, what are some of his thoughts about the projections? joel: it is one really about costs. also helping customers. that is one of the big strategic things cigna has done, which he said this is less about an insurance company and more about how can we become more of a wellness company? that caters toward consumers -- when you look at polls and stuff -- most consumers are really frustrated with their relationships with their insurance companies. jason: he is a guy very much in the center of everything. we caught up with him, as well. here is what he had to say. >> we see environment in the

future were three things exist. one, the products and solutions are more individually designed than designed on averages for large groups. two, the health care professionals and many fractures -- and many pharmaceutical devices are rewarded based on the quality and outcomes of what is delivered based on consumption. three, we engage in the capabilities of what technology can do. from digital modalities to tell a digital -- to other services, we think those three building blocks are critical for the future. jason: what are those bright spots at this point? what are the easy wins? >> in may, medicare advantage. we have really wonderful pockets around the country of highly engaged, integrated physician groups that are much more actively and come principally -- and comprehensively managing the patients are customer group. they are treating the whole person in a more conference of way and able to extend their

practices into the home. at cigna, we do that and about 12 cities around the united states. we like those bright spots, we just want to supercharge them and drive them further. jason: let's talk about the opioid prices. it feels like almost every day it becomes clearer and clearer that something massive is going on. what are the ways immediately that you are trying to stem those? >> a little over two years ago, we as a company stepped over to amplify the narrative around the u.s. opioid epidemic. we also came forward with a pretty aggressive pledge to reduce the consumption of pharmaceutical opioids for our customers by 25% in three years. not the customers being actively managed, not the at risk customers, the totality of our customers across medical and dental. the good news is we achieved it in 22 months. how do we achieve it? through our relationships, working physician by physician, our clinical community aided with information, we are

to prescribing patterns. in many cases, an individual will become chemically dependent on opioids after 10 days. and a high percentage of cases, over 21 days. we need to be mindful of the number of scripts being written. carol: and that goes directly to the patients and the physicians prescribing. >> we came directly to the physicians and dentists. the protocols in advance of that, the cbc protocols have changed relative to lower consumption levels, because it was perceived that there was less risk, but the data was showing the risk was there. why did cigna step in? we weren't invited. we viewed we had a social responsibility as a global health company. we define health and well-being quite broadly from that point. we saw data that suggested that four out of five people recently addicted to heroin were recently previously addicted to pharmaceutical opioids. we wanted to step ahead of the equation and engage. to do so, our mandate is much broader than the insurance

company. secondly, you have to view that you are working hand in glove with the medical profession. you are using information and actual outcomes to be able to drive the results. remiss if weld be do not ask about express scripts. what are you hearing from regulators, any idea on if they will sign off on the deal and when? >> we are actively engaged with the doj and we are going to the process now. both companies are complementary to one another. carol: are you still happy you are pursuing this company? >> yes. it is a tremendous opportunity to further improve affordability of health care. today, we are rapidly approaching a time frame where almost 25% of all medical costs pharmaceutical. it was not that long ago it was 10%. secondly, two thirds of that 25% are especially pharmaceutical. the most significant part of the cost equation. lastly, half of that is in the

medical side of the equation. you have to have the medical and pharmacy side of the equation linked together. taylor: up next, a brazilian billionaire and his art museum built on tax evasion and worth. jason: plus, working to get immigrants a path to economic success. taylor: this is "bloomberg businessweek." ♪

welcome back to "bloomberg businessweek." i am taylor riggs. jason: i am jason kelly. you can also listen to us on the radio on sirius xm channel 119 and a.m. 1130 in new york, and 106.1 in boston, and a.m. 960 in the bay area. 3ylor: in london on dab mux and in asia on the radio plus app. over in the features section, we profiled a man i had never heard about. jason: pretty far field we go to the brazilian countryside to a one-of-a-kind museum. taylor: interesting, that museum

built on tax evasion and child labor. jason: we got more from our reporter. bernardo paz is a mining tycoon and a very interesting character. he is on his sixth wife, but apart from the fact that he built one of the world's largest open-air art museums in his backyard, he is unlike other very rich people in that he doesn't like to show off his wealth. he is not interested in yachts and private jets. he did build this place in the hills of southeastern brazil. it is this amazing art park and tropical garden where the installations are by all sorts of top contemporary artists. i think it is important to realize that he is not exactly an entirely public minded billionaire.

his fortune came in part from tax evasion and money laundering. he was convicted for those things late last year. what people did not know about him until this story was published is that he built his fortune, the fortune that he used to create this amazing art park also by breaking environmental and labor laws. when i say environmental laws, i am talking about using illegally deforested trees from the amazon as fuel. when i say labor laws, i am talking about apparently using child labor. jason: the darker side that you just described, how is that expected to play out and what is the ultimate effect on him? alex: this kind of changes the moral calculus of the value of this place. this art park has become the

part of the patrimony of the country, but at what cost? i went to the middle of nowhere in brazil where it used to have -- where paz used to have vast fields of eucalyptus that he turned into charcoal for his pig iron plants. i talked to a man who says he was 10 when he started working in the ovens that turn that wood into charcoal. he didn't have any protections. he had to clamber on top of the ovens and sometimes burned his feet because all he had was flip flops. taylor: he is facing financial sanctions. i think he was indicted last year. there are some substantial charges against him. what is the future of some of his companies? he has some companies now that not the cyst area the museum, is that up for grabs? alex: his business has been on the decline for a while. he is in iron ore. obviously, prices have come down

a lot. he has also faced some government sanctions for breaking environmental and labor laws. the museum itself looks like it will be fine. the government of brazil, and specifically of the state where the museum is located, is very interested in preserving this because millions of tourists have gone and put brazil on the map for contemporary art in a way that it never was before. he actually struck a deal with the government to hand over or transfer ownership of 20 of the most famous artworks at the museum. jason: taylor, now we turn to a feel-good story. a game changer at the end of the magazine. taylor: you sat down with the ceo of mission asset funds. jason: this is a firm that works with new immigrants and gives them a new credit history and credit score. carol massar and i sat down with

him. here is his story. >> we are a nonprofit organization based in san francisco. we work primarily with low income immigrant communities to help develop their financial security. we got started about 11 years ago in san francisco working with immigrant communities here to help them develop their savings, get them banks, and get them more active in the financial marketplace. when we started our program about how to actually help individuals to develop their financial security, one of the things we noticed was that have do you actually do that when in fact, our community was largely un-banked or the vast majority of them had no credit score credit history? we realized that this was a big impediment for actually getting active in the marketplace. we needed to find a creative way to actually help them transition into the financial mainstream.

and to help them truly build their financial security. jason: there was a marketplace of sorts, but it was just not being organized in a way that could actually be used to create any sort of credit history, is that right? jose: that is correct. conventional wisdom added that all fat people needed to do was get more financial location and training. in fact, that sort of idea was based on the notion that they were financially illiterate, they didn't know what they were doing, they were spending too much on latte's or whatever it is. in fact, we said that in the immigrant community, they are actually very financially savvy. people do save, but save in a way that we don't recognize. they manage their money and much more complex ways than we give them credit for. they know more about exchange rates than many of us do. they know a lot that we were not giving them credit. one of the things we found that there was this tradition of people coming together to lend and save money together in very

informal ways. when we saw this activity, this had been going on for millennia across the country and across the world, we basically found a way to actually bring more value to that activity by helping build and improve and formalize that in a loan process so that we could service that loan and report that to the credit bureaus. by virtue of us reporting to the credit bureaus, we were able to help people build and improve their credit scores, or even if they didn't have a credit history, we were able to establish a credit history for them. taylor: -- carol: what is a typical loan amount, and who is a typical customer asking for money? do most people end up paying it back? jose: average loan is about $900. they usually have in the lending circle about nine or 10 people. the loan amount is determined by the people in that group.

some groups may decide to do $500, others $700, and others $1200 or so. they also decide on who goes first and gets the loan on the first try and second try. our default rate is at .7%. in our industry, that is extremely low. in the micro finance world, the toical default rate is 14% 15%, so to get at that .7% is like something significant has happened. taylor: "bloomberg businessweek" is available on newsstands now. jason: and on businessweek.com and our mobile app. what did you love? taylor: i like to sit down with mohammed el-erian, with so many warnings. pointing of different cracks that we may have not have been looking for. jason: even the physical cover, shaking words feel like a warning sign. taylor: what was your favorite? jason: i love private equity, as you know. the story of toys "r" us and what really happened. what is the most famous toy company in the world, all the

things that could have gone wrong really did. it is a fascinating read. more bloomberg television starts right now. ♪

david: when you told people you were going to raise a $100 billion fund, did they tell you you were a little crazy? masayoshi: some people said. [laughter] david: did you suffer discrimination growing up in japan? masayoshi: that made me stronger. david: how did you feel losing $70 billion of net worth? masayoshi: i was so close to, you know, fall down from the cliff. we almost went bankrupt. somehow, i survived. >> would you fix your tie, please? david: well, people would not recognize me if my tie was fixed, but ok. just leave it this way. all right. ♪